In Retrospect, Should You Have Bought Tesla Stock Or A Tesla Car?

It's a question we've seen asked for many years, and it's definitely worth exploring.

Tesla Model S Signature Series Is Sold Out

EVANNEX EVANNEX

By: EVANNEX

Jul 28, 2021 at 10:30am ET

Add InsideEVs as a preferred source in Google

Comment

This article comes to us courtesy of EVANNEX, which makes and sells aftermarket Tesla accessories. The opinions expressed therein are not necessarily our own at InsideEVs, nor have we been paid by EVANNEX to publish these articles. We find the company's perspective as an aftermarket supplier of Tesla accessories interesting and are happy to share its content free of charge. Enjoy!

Posted on EVANNEX on July 28, 2021 by Charles Morris

Tesla’s long-range electric vehicles have done much to vanquish the dreaded disease known as range anxiety, but doctors specializing in cryptopathology (the study of imaginary diseases) have identified a new morbid malady, for which much of the blame falls on the California carmaker: TSLA remorse.

Above: A look at Tesla's original sedan, the Model S (Flickr: SoulRider.222)

The ailment known as TSLA remorse afflicts those who can’t get over the fact that, if they had bought and held a few years ago, they would now be stinking rich.

While anyone who follows the stock market may feel an occasional twinge of TSLA remorse symptoms, the most serious form of the illness afflicts those who actually bought TSLA stock back in the day, but sold their positions too early, or succumbed to the temptation to trade in and out of the stock to lock in short-term profits, and thus missed the really big upward moves.

A recent article in GOBankingRates identifies a group of patients who are afflicted by a viciously virulent variant of TSLA remorse—those who thought about buying TSLA stock back in 2012, but decided to invest their money in a Tesla Model S instead.

It’s true that Teslas tend to hold their resale value much better than vehicles of other brands do, but a car is always a wasting asset (with the possible exception of one sequestered safely in a garage until it becomes a collector’s item—some buyers of the Tesla Roadster might find themselves in this position), and no financial advisor would ever consider a car to be an investment in the sense that stocks, bonds or real estate are investments.

Just how much future wealth was sacrificed by those fun-loving grasshoppers who decided to live for the moment when Tesla first revealed Model S to their enraptured eyes? Well, the Model S sedan first went on sale on June 22, 2012, at a price of $77,400 (for the 85 kWh version). On that day, TSLA stock was trading at $6.76 per share (split-adjusted), so a thrifty ant could have bought about 11,450 shares for the price of one sedan.

As of this writing, TSLA is trading at around $655, so an investment of $77,400 in 2012 would be worth approximately $7.5 million today—enough to buy a loaded Model S for each of your 12 best friends, with plenty to spare.

Of course, the performance of Tesla’s stock has been unprecedented—it gained 740% in 2020 alone, and has returned over 8,900% to patient investors over the past 9 years. GOBankingRates points out that no investor could have expected that kind of return from TSLA shares, or any other stock, but the lesson is no less clear: “Placing your money into an appreciating investment is usually a better long-term financial bet than purchasing depreciating consumer goods.”

That’s wise advice that will probably pass, unhindered and unheeded, through the ear canals of most new-car buyers—and that may just be a good thing. After all, it’s Tesla’s stupendous sales that have powered TSLA’s rambunctious returns, so those who have earned from investing in the equity can be thankful that others squandered their savings on sedans.

Alas, there’s no known cure for TSLA remorse, but there is one effective treatment: enjoy driving your Tesla.